23 March 2017 /
Asset allocation is a key step in Sandaire’s investment process and, necessarily, we spend much time considering factors that may affect investment returns of different asset classes. Presently we are in a challenging but interesting period and this market update highlights the fundamental factors we are considering.
Since Sandaire’s Asset Allocation Committee last met in August, we currently find that economic growth is no stronger, and liquidity (interest rates) and inflation are rising in the UK and US. Yet equity markets have been robust despite their already lofty valuations.
The current economic and political background for investment markets is complex because we are operating in an environment which has no historical precedent.
A potential Brexit has been a part of our thinking on the UK economy since before the referendum was formally announced in late February.
After the tumultuous start to the year financial markets recovered somewhat in March and have so far remained stable in April.
Since the beginning of this year there have been sharp falls in many asset prices, notably equities and credit. These declines mark an acceleration in trends that had been evolving in the latter part of 2015.